India

Need must win over political apathy

As the new year begins, the wind industry will be gritting its teeth to tough out a bumpy ride. With uncertainty over federal support having caused untold damage in the US, cuts in incentives in countries across Europe and a slowdown in China, 2013 is not predicted to be a good year for wind.

In the third-biggest wind industry in the world the situation is not looking rosy either. India has seen only 850MW installed in 2012, compared with 3GW in 2011. Commentators put this down to the withdrawal in April of two incentives for wind - accelerated depreciation, which allowed developers to save tax on their wind investments, and the generation-based incentive (GBI), which encouraged energy production rather than just installations with an incentive level of INR 0.5/kWh ($0.009/kWh). Other problems, such as an outdated grid, cash-strapped utilities and an unenforced Renewable Purchase Obligation, add to the industry's woes.

India's need

But India's wind industry has a major advantage over that of other countries. At the recent Windpower India conference in Chennai, the mood was that, despite the problems, wind would prevail. The reason is simple - the market's main driver is a colossal demand for energy.

Rising electricity demand created by development and economic growth is coupled with a massive existing deficit - 40% of the population has no access to electricity, and power cuts occur daily. Demand is expected to more than triple by 2030 from 2005 levels.

India also does not suffer from problems that besiege the wind industries in many other countries. There are no political parties opposed to renewables or with a particular anti-wind feeling. Similarly, business and the public are supportive of renewable energy. Not-in-my-backyard attitudes are unheard of. The majority of the Indian wind industry is privately funded and, although finance is tight, investors believe that the industry there has matured and projects are well planned and use quality technology.

With all these points in its favour, the wind industry just needs the right incentives. Reinstatement of the GBI is crucial. The industry at large is confident that this will happen; it is just a question of when, and on what terms.

The government should be strongly motivated to resolve this issue. Offering incentives for renewables will bring energy security and save billions of dollars. Oil imports currently cost India $130-160 billion a year, while $60 billion is spent on coal. Reliance on fossil fuels is unsustainable - economically as well as environmentally - as the cost of importing them is rising by 18% a year. Investment in wind in India is surely a no-brainer as it is already cheaper than coal in three states. Yet the government is subsidising coal by billions of dollars.

Climate change targets also exist: India wants to achieve 15% of renewable-energy penetration in electricity generation by 2020. Renewable energy minister Farooq Abdullah said in his conference speech that these targets cannot be met without a substantial contribution from wind. Indeed, to meet the target, around 8GW of wind will need to be installed each year.

However, it remains to be seen if the government can overcome bureaucratic delay and political apathy and give the industry the boost it - and the country - so badly needs.

Catherine Early is associate editor of Windpower Monthly

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